Why retail giant 7-Eleven is on a rival's shopping list

7-Eleven, recognized as the largest convenience store chain globally, has recently made headlines due to a surprising buyout offer from a Canadian competitor. This unexpected move has sent shockwaves through Japan, as it marks a significant moment in the business landscape where a Japanese company of such magnitude is being considered for acquisition by a foreign entity. Traditionally, Japanese firms have been more inclined to acquire businesses abroad rather than the other way around. With approximately 85,000 stores spread across 20 countries and territories, 7-Eleven has established itself as a go-to option for quick, affordable, and delicious meals, particularly in markets like Japan and Thailand. Ryuichi Isaka, the CEO of Seven & i Holdings, the parent company of 7-Eleven, proudly stated that they operate more stores than both McDonald's and Starbucks combined. Of the total number of stores, around 21,000 are located in Japan, while the United States hosts about 10,000 outlets. In contrast, the Canadian company Alimentation Couche-Tard, which operates the Circle K brand, has nearly 17,000 stores across 31 countries, with a significant portion situated in North America. The valuation of Seven & i Holdings exceeded $30 billion before the news of the buyout offer surfaced, leading to a notable surge in 7-Eleven's stock prices, which jumped over 20% on Monday, although some of those gains were relinquished the following day. Analysts attribute this increase to the weakening of the Japanese yen against the US dollar and other major currencies, making Seven & i more appealing to foreign investors. Additionally, the Japanese government's initiatives to encourage mergers and acquisitions seem to be yielding results, according to Manoj Jain from Maso Capital, a hedge fund based in Hong Kong. However, it is important to note that the proposal is still in its preliminary stages, and given the potential scale of the deal, it may face scrutiny from competition authorities. 7-Eleven has successfully capitalized on the popularity of its food offerings, which include a diverse range of items such as rice balls, sandwiches, cooked pasta, fried chicken, and dumplings. Unlike many convenience stores around the world that primarily serve snacks, 7-Eleven in Japan has become a culinary hotspot for both locals and tourists. The chain's food items have gained immense popularity on social media platforms across Asia, with many visitors considering a trip to 7-Eleven as a must-do activity in Thailand, where its ham and cheese toastie has gone viral on TikTok. British singer Ed Sheeran has also contributed to the brand's visibility, as a video of him sampling snacks from a 7-Eleven in Thailand became a sensation online. Mr. Isaka aims to replicate this success in the US and European markets, especially as investors have urged the company to streamline its operations and concentrate on the 7-Eleven brand. The company is actively revising its strategy to ensure that more stores adopt the successful model of their Japanese counterparts. Mr. Isaka emphasized that stores offering fresh food tend to attract a larger customer base, stating, 'We want to grow with high quality - not just increase the quantity. We want to make sure customers are happy, and increase sales of each store whilst increasing the number of stores. ' Seven & i has also been on a shopping spree, acquiring over 200 stores in the US from the gas station chain Sunoco for approximately $1 billion earlier this year. In April, they repurchased more than 750 stores from a franchisee in Australia. For most of its nearly century-long history, 7-Eleven was an American brand, having started in 1927 by selling blocks of ice to keep refrigerators cool. The company later expanded its offerings to include essential items like eggs, milk, and bread, operating from 7 AM to 11 PM, which is how it got its name. The first 7-Eleven store opened in Texas in 1927, and as the business grew, the company began franchising outside the US. In 1974, the Japanese retail firm Ito-Yokado opened the first 7-Eleven store in Japan, and in 1991, it acquired a 70% stake in the US parent company. The founder of Ito-Yokado, Masatoshi Ito, who passed away in 2023 at the age of 98, is often credited with significantly contributing to the brand's expansion. In 2005, Ito-Yokado was renamed Seven & i Holdings, with the 'i' symbolizing both Ito-Yokado and Mr. Ito, who was the honorary chairman at that time. As the company now faces the decision of whether to maintain its Japanese ownership or revert to its North American roots, experts are speculating whether more of Japan's major corporations could become targets for foreign acquisitions. There appears to be a growing openness among Japanese boards and management teams to accept foreign investments and consider offers from outside, which may encourage more foreign investors to pursue their interests in Japanese companies.